Cost-Justifying Distributed Generation for Campus Reliability
A cost analysis framework for distributed generation investment decisions using two campus case studies, showing how peak load reduction and emergency backup justify DG systems.
This paper presents a cost analysis method for deciding whether to invest in distributed generation (DG) systems to power critical facilities during outages. The research uses two campus case studies to ground the analysis in realistic operational parameters.
The Investment Problem
Campus facilities — hospitals, universities, data centers — face both reliability requirements and energy cost pressures. Distributed generation offers a potential solution to both, but the capital cost of DG systems requires careful financial justification.
Framework
The authors show how DG systems can reduce peak power charges and provide emergency backup value simultaneously. By analyzing savings from peak load reduction and considering capital costs through a structured financial framework, the study provides a replicable methodology for DG investment decisions.
Key Finding
Accurate peak usage predictions are essential for making DG systems economically viable. In some cases, even systems with limited operating hours can still yield acceptable payback periods when peak demand charges are high enough to offset capital costs.